Source · Select Committees · Public Accounts Committee
Thirty-fourth Report - Covid-19: Support for jobs
Public Accounts Committee
HC 920
Published 20 December 2020
Conclusions (22)
2
Conclusion
The age of the Self Assessment system made it more difficult for HMRC to provide financial support for the self-employed. Its tax system for the self-employed lags behind that available in other countries. The Self Assessment system was built in the 1990s, and its design and age limits the amount, …
3
Conclusion
The Departments have not done enough to reduce the number of people excluded from the schemes. The Departments still do not have a complete assessment of the number of people excluded from the first phase of CJRS and SEISS up to the end of October 2020, but the best estimate …
4
Conclusion
The Departments did not evaluate the schemes or identify which the groups they support before extending them. Both the schemes have been extended due to the prolonged impact of the pandemic, but the Departments have not yet produced evaluations of the initial CJRS and SEISS schemes. HMRC provides monthly updates …
5
Conclusion
The Departments will not know the actual levels of fraud and error within these schemes until 2021. HMRC does not expect to have a statistical estimate of the total fraud and error levels across both schemes until the end of 2021. Whilst waiting for this estimate, there are other metrics …
6
Conclusion
Too much chopping and changing of the new schemes has created uncertainty for the UK nations, regions and businesses, regarding financial support and job security. Nations, regions and businesses, as well as their employees, need as much certainty as possible to allow them to plan ahead. Instead what they got …
7
Conclusion
We are concerned that HM Treasury is unable to explain how much the extended schemes are forecast to cost or what would constitute value for money. HM Treasury argues that it falls to the Office for Budget Responsibility (OBR) to produce forecast costs for the scheme extensions. However, HM Treasury …
1
Conclusion
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury and HM Revenue & Customs (HMRC) about the employment support schemes that they have established since the start of the covid-19 pandemic.1
8
Conclusion
HMRC used the data in its Self Assessment system to calculate how much self- employed people would receive as part of the SEISS grant award. However, this was developed in the 1990s and lags behind other countries’ systems. HMRC told us that with better quality data it may have been …
9
Conclusion
HMRC’s investment in its RTI system meant that, unlike SEISS, eligibility for CJRS was based on more up-to-date data. The RTI system is used on a monthly basis by employers to submit tax information on their workforce to HMRC. HMRC said that this information was vital in enabling it to …
10
Conclusion
The extension of both schemes was announced in November 2020. At that stage the initial schemes had not been formally evaluated. The Departments told us that they were undertaking informal evaluations to help them tailor their communications to those the schemes were aimed at. They explained that they would be …
11
Conclusion
We asked whether the Departments had undertaken any evaluation on the regional differences in take-up or the schemes and take-up by groups with protected characteristics.24 HMRC currently reports monthly on the cost of the schemes and provides analysis on take-up by different demographics. The data for October 2020 showed that …
12
Conclusion
HMRC’s initial planning assumptions suggested that the level of fraud and error would be 5% to 10% within CJRS and 1% to 2% within SEISS. We asked whether it expected the level of fraud and error to change under the new scheme. HMRC told us that it had originally estimated …
13
Conclusion
As many as 2.9 million people may have been excluded from the first versions of CJRS and SEISS. The NAO found that people were excluded either because of policy design choices or due to constraints in the tax system. An estimated 1.1 million people were excluded from CJRS because HMRC …
14
Conclusion
We were concerned that the extension to SEISS could leave more self-employed people without support than the initial scheme. HMRC based eligibility for the initial SEISS on tax return data up to 2018–19 and estimated, as part of initial planning at the start of lockdown, that this meant around 0.2 …
15
Conclusion
Two further groups that were largely excluded from support were freelancers and owner-managers of companies. Freelancers generally have short-term contracts with employers and as a result many might not have been on a company’s PAYE system at the cut-off point for furlough. HM Treasury said that was aware of the …
16
Conclusion
The initial CJRS scheme was due to end on 31 October 2020. In September, the government announced that it would be replaced by a Job Support Scheme (JSS) that would top up the wages of workers working at least one-third of their normal hours, with the employer also contributing.38 HM …
17
Conclusion
We noted that a large number of business, particularly within more restricted areas, had not been able to operate normally for many months. While support for businesses is expected, it is essential that government provides this money as quickly as possible.46 The Job Retention Bonus was supposed to pay businesses …
18
Conclusion
Employees who were let go after 23 September 2020 can be rehired and furloughed again with CJRS extended, but if they were let go before that date then it would not be possible to furlough them. HM Treasury told us this was similar to the approach it took when the …
19
Conclusion
We asked the Departments how much they expected the extended furlough scheme and the SEISS would cost the taxpayer on top of the £55 billion spent so far. HM Treasury told us that it was not responsible for forecasting the expected cost of the scheme, which would be published by …
20
Conclusion
HM Treasury asserted that this was a similar approach to that it had taken when introducing the original schemes in March.54 It told us that, at the height of the initial schemes in the spring, they cost around £10 billion per month, but that this had reduced “quite significantly” over …
21
Conclusion
The total cost of the schemes is now estimated to be £76 billion, with OBR estimating that the extensions to the schemes will add an additional £21 billion to the total. We asked the Departments what calculations they had made of the value for money provided by the schemes. HM …
22
Conclusion
The condensed timetable for introducing the schemes meant that a lot of the standard documentation that would accompany such a major policy initiative—business cases, options appraisal and detailed cost-benefit analysis—wasn’t undertaken back in the spring.57 HM Treasury asserted that the potential economic costs and human cost of large-scale unemployment if …